Will producing extra milk achieve a profit or even a return on investment?

With just over five months to go to quota removals in the EU, the big question for many farmers looking at expanding is whether extra milk produced will mean extra profit or a return on investment, according to Linda O’Neill of the Livestock Improvement Company (LIC).

The Dairy Consultant says that while the end of milk quotas is a long-awaited opportunity, increasing the level of dairy production from land currently used for dairy farming and land under alternative farming use does not necessarily mean an increase in profit.

“The great risk, especially now that dairy returns are falling and are forecast to decrease in the short to medium term, is the level of investment and expenditure required on farm to achieve the Food Harvest 2020 targets. The question we need to keep focused on is, whether the extra milk produced is actually going to achieve a profit and a reasonably return on investment.”

She said that being a successful dairy farmer today isn’t an easy task. “It is a demanding business, in which to be successful, requires many varied skills. You need to become an excellent stock manager, an effective breeding manager and an efficient grassland manager. Add into the mix the challenges of weather conditions, maintaining good people skills and dealing with burgeoning administration.

All this applies to existing dairy farmers but when you add to the equation expansion or a new dairy set up, it becomes a daring challenge for the best of operators. While we have little control over the volatility and fluctuations in the marketplace for our dairy produce, we do control what happens inside the farmgate.

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“The price of milk is declining at the moment but it is at a time like this that the difference between the top operators and those operating below optimum efficiency will be most apparent. Good, sound, objective advice and support is likely to make the difference to the bottom line in this rapidly changing and unpredictable environment.”

LIC Ireland says the need for ‘one-on-one’ consultancy advice and decided to replicate what LIC New Zealand has done in the way of providing an independent, farm profit orientated consultancy service.

For over a year now, Linda O’Neill has taken on the responsibility in the role of dairy consultant with the aim of providing pasture based, profit-focussed advice to dairy farmers.

From a dairy farming background, she also has experience of managing large dairy herds in both Ireland and New Zealand. To date there has been a keen interest for her ‘one-on-one’ consultancy which has focussed on improving six week in-calf rates, growing and utilising more pasture, profitable use of supplements, managing costs and any other aspects affecting farm income. She also facilitates some specialised discussion groups with a high herd fertility and profit focus.